The yuan rose for the first time in eight days in Shanghai after the PBOC raised its reference rate by 0.1 per cent to 6.5385. "With a stronger fixing, they're trying to ensure a stable yuan even as they ease policy through the reserve-requirement- ratio channel," said Khoon Goh, a foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore.

The yen dropped against 31 major peers, falling from strongest level in almost three years against the euro. It declined 0.3 per cent to 112.99 per US dollar and slipped 0.3 per cent to 122.94 per euro.

A Bloomberg gauge of 20 emerging-market currencies increased 0.6 per cent, rising for a second day. Russia's rouble was the best performer, strengthening 1.6 per cent, followed by a 1.4 per cent gain in South Africa's rand and a 1.1 per cent jump in Mexico's peso.

Commodities

Oil climbed from the highest close in more than seven weeks following the first monthly decline in production from the Organisation of Petroleum Exporting Countries since November. West Texas Intermediate rose as much as 2.3 per cent before erasing the gain.

The queue of ships waiting outside Europe's biggest port and oil-trading hub of Rotterdam has grown to the longest in seven years as a global supply glut fills storage capacity. As many as 50 oil tankers, twice as many as normal, are waiting outside Rotterdam because storage sites are almost full.

Nickel led gains in industrial metals, rising 2.2 per cent to $US8680 a tonne, as the latest Chinese stimulus bolstered confidence in the world's second-largest economy. "The fundamental outlook for nickel now appears brighter, with the market ending the year in balance, following improved fourth-quarter demand and continued supply-side adjustments," Glencore said in its preliminary 2015 results release. "Further supply cuts are required to support materially higher prices, absent a significant pickup in demand."

United States

US stocks rallied to a seven-week high after manufacturing in the world's largest economy showed signs of stabilising. The Dow Jones Industrial Average surged more than 300 points, while the Standard & Poor's 500 Index rebounded from a third consecutive monthly decline. In a sign that investors are becoming more confident, the CBOE Volatility index fell 11.73 per cent to its lowest since December 31.

Morgan Stanley and Citigroup both rose more than 5 per cent.

The technology sector rose 2.69 per cent. Apple was up 3.80 per cent at $US100.36, giving the biggest boost to the S&P and the Nasdaq.

The Institute for Supply Management (ISM) said its index of national factory activity increased 1.3 percentage points to a reading of 49.5 last month. A reading below 50 indicates a contraction in manufacturing, which accounts for 12 per cent of the US economy. While it was the fifth straight month the ISM index was below 50, it was also the second consecutive month that it has risen.

In a separate report, the Commerce Department said construction spending in January increased 1.5 per cent to $US1.14 trillion, the highest level since October 2007, as both private and public outlays rose.

Europe

The Stoxx Europe 600 Index climbed 0.8 per cent, with all industry groups rising at least 0.8 per cent. The equity benchmark has rebounded more than 11 per cent since falling to a 2013 low on February 11, led by miners and energy producers.

BMW gained 4.2 per cent after its chief executive officer forecast another year of record sales, and Daimler added 2.5 per cent after its CEO noted strong growth in Europe and China.

London Stock Exchange Group surged 7.2 per cent after Intercontinental Exchange said it's considering a bid for the company that's in merger talks with Deutsche Boerse.

Barclays slid 8.1 per cent on concern the bank's earnings outlook is weakening after it slashed its dividend.

Glencore lost 2.1 per cent after profit slumped the most since the commodity trader and miner became a public company.

What happened yesterday

Australian shares shrugged off weak overseas leads to lift on Tuesday, with stronger commodity prices pushing mining and energy stocks higher while the big four banks also recorded good gains.

The market was still in the red in the early afternoon, but from there the benchmark S&P/ASX200 lifted steadily upwards to close 0.85 per cent higher at 4922.3 points, while the broader All Ordinaries closed 0.84 per cent higher at 4989.6.